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Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.

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BLS Says 199,000 Jobs Created in November, Unemployment Rate 3.7%; Wall Street Clown World Reacts

Friday, December 8, 2023, 9:20 am ET

At last, we've come to the end of a week of employment data.

Updating, the JOLTS (Job Openings and Labor Turnover Survey) report showed fewer jobs available at the end of October, so, a little dated, but, down 617,000, to 8.7 million openings across America.

ADP's Private Payroll report for November came in below expectations at 103,000.

On Thursday, Challenger, Gray & Christmas reported that there were more layoffs, totaling 45,510 in November, up 24% from 38,836 in October.

Through Thursday's close, the major indices were largely unchanged, awaiting the granddaddy of all seasonally-adjusted, fudged, and hopelessly goal-seeking and inaccurate reports, the November Non-farm Payroll report from the Bureau of Labor Statistics.

As of the closing bell Thursday, for the week, the Dow was down 128 points, NASDAQ was up 35 points, the S&P had dropped nine points, and the NYSE Composite Index had fallen 126.90.

Making their announcement at 8:30 am ET, the BLS threw a spanner into the mix, guesstimating that the USA had gained 199,000 jobs in the month of November and the unemployment rate improved to 3.7%. US stock futures, which were already down and trending lower, took the news badly, at first.

Here's where they stood at 8:25 am ET:

S&P Futures: 4,583.75, -5.75 (-0.13%)
Dow Futures: 36,119.00, -47.00 (-0.13%)
Nasdaq Futures: 15,988.25, -50.50(-0.31%)

Immediately following the release, Dow futures fell to -150 points, same for NASDAQ. S&P futures felt the pain, down 30 points.

Seriously, it was like everybody's mother died at the exact same moment. The clowns handling the finances of practically every investor and retiree in America was absolutely apoplectic that their trusted ally, the BLS, counted nearly 100,000 more jobs than ADP. How could they? America is supposed to be failing, jobs being lost, so the Fed can cut that nasty federal funds target rate back to ZERO, where it belongs.

But, then, a light dawned on every trader in the universe. It was Friday, after all, and stocks have to go up on Friday because we all have option calls out there, and, well, it's the holiday season, so, let's all get a grip.

Futures rebounded to a point above where they were prior to the scary BLS numbers. By 8:50 am ET, US stock futures looked like this:

S&P Futures: 4,585.50, -4.00 (-0.09%)
Dow Futures: 36,138.00, -28.00 (-0.08%)
Nasdaq Futures: 15,974.00, -64.75 (-0.40%)

Apparently, those trading NASDAQ futures didn't get the memo.

Of course, no matter what the BLS numbers were, they would provide a good enough reason to punish anybody so bold as to buy gold or silver. Gold was down about $15, and silver, which was pushing $26 just a few days ago, fell below $24.

European traders were perplexed. Stocks rose, then stopped, apparently awaiting marching orders from their Us masters.

If these morons weren't so seriously brain-damaged, it would be comical. Actually, it is comical.

Come on, admit it, you love CLOWN WORLD.

At the Close, Thursday, December 7, 2023:
Dow: 36,117.38, +62.95 (+0.17%)
NASDAQ: 14,339.99, +193.28 (+1.37%)
S&P 500: 4,585.59, +36.25 (+0.80%)
NYSE Composite: 16,136.85, +44.47 (+0.28%)


More Layoffs, Fewer Jobs is Music to Wall Street Ears, but, for How Long?; Oil Falls Below $70

Thursday, December 7, 2023, 9:28 am ET

Stocks nose-dived in the afternoon Wednesday, sending the major averages to a third straight losing session (NASDAQ up 44 points Tuesday). Following the torrid November rally, nobody should be surprised that stocks have pulled back. The question remains as to how much lower they can go.

The answer will probably be derived from data, most of which this week revolves around employment. Wednesday's report from ADP saw November private payrolls increase by 103,000 jobs. October's gain was 106,000; September saw only 99,000 new jobs created, suggesting that job growth is fading, a trend that Wall Street woould like to see continue, as a slowing economic background is likely to cause the Federal Reserve to keep interest rates where they are for the time being and potentially cut rates as job creation continues to slow.

Thursday morning, global outplacement firm Challenger, Gray & Christmas said in its monthly report that announced job layoffs totaled 45,510 in November, up 24% from 38,836 in October. However, the November planned layoffs were 41% lower than the 76,835 cuts in November, 2022.

The report also noted, "So far this year, companies have announced plans to cut 686,860 jobs, a 115% increase from the 320,173 cuts announced in the same period last year. It is the highest January-November total since 2020, when 2,227,725 cuts were recorded. Prior to 2020, it is the highest year-to-date total since 1,242,936 cuts were announced through November 2009."

All of that should be music to traders' ears, though the downside is that layoffs and a weakening employment environment lead to more severe economic conditions and recessions, a confounding issue for those wishing to square the circle of lower rates, fewer people working, and recession.

Cutting through the pretzel logic dominating the financial wonks and pundits, there's more risk from unemployment than from interest rates that are only at levels which were normal in decades past. Yield on the 10-year note fell to 4.11% on Wednesday, the lowest since August. Short-term yields, those with maturities of six months or less, have been persistently above five percent since March and show no signs of declining, given the federal funds target rate of 5.25-5.50%, which is unlikely to change until March, at the earliest.

The inverted treasury yield curve - with short-term rates higher than longer-term rates - has distorted the capital markets and placed undue pressure on businesses, many of which are forced to borrow at higher rates for payroll, purchases, and expansion.

In its attempt to quell inflation via higher rates, the Federal Reserve walks a fine line, at once hoping for lower input costs and final goods and services prices while at the same time trying to avoid a recession, complete with layoffs and business failures. Cross-currents between the labor market, economic conditions, and stock prices are battling for predominance, with nobody winning. So far, the Fed has avoided disaster, but strains on the economy are becoming more evident, nearly by the day.

By raising rates so rapidly from March, 2022, though July of this year, the Fed has so far managed to bring down inflation from above nine percent last July to around three percent presently. Analysts see no further rate increases at the next meeting - December 12-13 - and expect between one and four rate cuts in 2024, which would be good for stocks and possibly avoid a recession.

Looking ahead to Friday's non-farm payroll report for November, expectations are for an increase of 180,000 in November after rising 150,000 in the October.

Other problems stemming from the Fed's interest rate regime include increased costs of borrowing by government.

The chart below shows the interest on federal debt, which is about to exceed $1 trillion a year. This, beyond anything else, is unsustainable and has put pressure on the current legislators to cut spending elsewhere, a problem not likely to be resolved any time soon, and potentially causing further damage to the government's credit rating and ability to finance its activities.

Elsewhere, gold continues to hold above the $2,000 price level, but oil, due to slack demand and increased production outside of OPEC+, is moving in the opposite direction, with WTI crude falling below $70 late Wednesday night for the first time since early July.

Germany's DAX made another all-time high on Wednesday, remarkable, given the general economic weakness in Europe. At midday, stocks are lower across the board in Europe. Overnight, Asian stocks were down, though not severely.

S&P and NASDAQ futures are up, with Dow futures negative by single digits.

At the Close, Wednesday, December 6, 2023:
Dow: 36,054.43, -70.17 (-0.19%)
NASDAQ: 14,146.71, -83.19 (-0.58%)
S&P 500: 4,549.34, -17.84 (-0.39%)
NYSE Composite: 16,092.38, -30.62 (-0.19%)


Weak Jobs Data, Tortured Logic Sends Stock Futures Higher; ADP November Jobs +103,000; Rally at Stall Speed

Wednesday, December 6, 2023, 9:55 am ET

Getting themselves re-tethered back to cockeyed logic, Wednesday morning's ADP November National Employment Report threw some extra fuel on the Wall street "rate cut" cheerleaders, figuring that if the economy weakens considerably, the Federal Reserve would have no choice but to cut interest rates to spur investment, spending, job creation, and just about everything else that would contribute to the "growth" meme. In reality, stock jocks just want lower interest rates so companies can buy back their own stock at a lower opportunity cost, reduce the number of shares available and thus, make their next EPS appear better than it should.

That would be fourth quarter and year-end earnings, which are going to be important come January.

It's some very twisted logic to believe that weakening the economy in order to strengthen it is even close to rational. It falls into the same category of "we have to pass the bill in order to see what's in it," a la Nancy Pelosi on Obamacare. Nothing about slowing employment or real unemployment has any pleasantness to it. That's just the obvious truth.

So, when ADP says the private sector only created 103,000 jobs in November - traditionally a strong month for job gains as companies hire for the expected "busy" holiday season - it is in effect saying that Christmas will be one in which stockings are filled with the equivalent of coal. In the new climate change parlance, that would mean everybody's getting a new cell phone charger or a hand warmer.

But, Wall Street and their toadies in the financial media will try to sell a weak jobs number as some great good, which, sadly, it is not. It is bad, with a capital B.

Later this week, on Friday, the glorious US government - which never lies about anything - will fudge up some numbers showing the true employment picture via seasonal adjustments, estimates, and the famous BLS birth-death model (editor's note: we tried to link to the BLS, but continued to get only a warning that the server was not responding. Maybe those tireless accountants are just so busy crunching November jobs numbers that they've overloaded their system!).

Whatever they derive will be chock full of holes, misrepresentations, suggestions, and bilious hyperbole. At least we can count on that. Otherwise, what Wall Street, FoxBusiness, and CNBC tells us is a very, very important number will be mostly fairy dust.

Looking forward, the massive November rally seems to have hit a speed bump as it transitioned into December. Taking out this past Friday (December 1), all the major indices are lower in aggregate for the first two days of the month. The S&P was playing footsie with the UNCH line all day Tuesday after dropping 24 points Monday, so it will have to do a bit of a jog to assure positivism. Likewise the Dow, off 120 points this week.

There's only so far one can push on a string. Sooner or later it just becomes an untenable sideways tangle.

Keeping up with end of year countdowns, there are only nine days until Congress leaves DC for their holiday break. That's probably the most important number right now as funding for both Ukraine and Israel killing machines is being held up by Republicans (and a few stealthy Democrats), who want to tie any handouts to changes at the Southern border and immigration policy. While Joe Bribem just keeps wetting himself, as it looks like congress will go home without spending any more money on bombs, guns, tanks, missiles.

There are 18 days until Christmas.

There are 25 days until New Year's.

Unfortunately, turning the page on the calendar won't allow anybody to escape media hysterics because there are only 40 days until the Iowa Caucuses (January 15) and 48 days until the New Hampshire primary (January 23), which means everybody in the world is supposed to become attuned to droll presidential politics.

Ho, ho, ho.

At the Close, Tuesday, November 5, 2023:
Dow: 36,124.56, -79.88 (-0.22%)
NASDAQ: 14,229.91, +44.42 (+0.31%)
S&P 500: 4,567.18, -2.60 (-0.06%)
NYSE Composite: 16,123.04, -109.79 (-0.68%)


Is the Rally Over? Bitcoin Roars; Gold, Silver Slashed as US Dollar Hegemony Struggles to Stay Relevant

Tuesday, December 5, 2023, 9:10 am ET

With the major indices seeking a sixth-straight week to the upside, stocks took a detour Monday, with the NASDAQ leading the way lower.

There wasn't much in the way of news or data by which to move markets, but, seasoned traders consider stocks to be slightly oversold following the November rally which took the Dow nearly 3,000 points higher. If valuations are suddenly going to matter, the rally could indeed be finished, though liquidity suggests that any declines may be short and shallow.

Overnight, Asian stocks took a beating, with Japan's NIKKEI down 455 points (1.37%) and Hong Kong's Hang Seng losing 318 (1.91%). In Europe, the DAX, CAC, and IBEX are all higher, while England's FTSE is marginally lower.

Bitcoin continues to make new highs for the year, hitting $42,228 on Monday. Oddly enough, investors appear to want more of the invisible currency than gold, which stumbled badly. After reaching beyond $2,135 in Asian markets, everybody's favorite pet rock was slapped back to $2,040 in morning trading and failed to rebound the remainder of the day and overnight. Silver was also beaten down. After nearly reaching $26/ounce, it was sold off to $24.82 on Monday and took a smaller fall Tuesday morning, declining to $24.64.

Still a target for bullion banks, gold and silver will continue to be suppressed on the COMEX, which serves to bolster the case for the ailing US dollar.

History and math say this condition will not pass the test of time.

With the opening bell to ring in about half an hour, futures are pointing lower.

At the Close, Monday, December 4, 2023:
Dow: 36,204.44, -41.06 (-0.11%)
NASDAQ: 14,185.49, -119.54 (-0.84%)
S&P 500: 4,569.78, -24.85 (-0.54%)
NYSE Composite: 16,232.82, -30.93 (-0.19%)


WEEKEND WRAP: GOLD! STOCKS! BONDS! BITCOIN! Welcome to the Holidays at Clown World Casino

Sunday, December 3, 2023, 11:00 am ET

Unsurprisingly overshadowed by another stellar performance by stocks, the spot price of gold reached a record high of $2076.10 on Friday and was simultaneously clocked at $2094.70 on the COMEX continuous contract.

Major US indices ramped for the fifth straight week while the purchasing power of the dollar, measured by gold, continued to fall freely. A vicious treasury rally failed to disinterest central banks from pursuing tonnes of gold, now clearly the most viable alternative to paper assets for FX.

Stocks

The Dow Industrials have closed on the positive side five straight on a weekly basis and on 18 of the last 23 daily sessions, surpassing the highs of the year made back on August 1.

Simply put, stock gains are a manifestation of the liquidity glut remaining extant from decades of easy monetary policy. The Fed is not going to unwind these excesses with interest rate increases nor jawboning. It will take a crisis of greater magnitude of either the dot-com bust or the 2007-09 sub-prime meltdown. Money has to go somewhere. Stocks are the preferred risk asset.


Treasury Yield Curve Rates

Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr
10/27/2023 5.57 5.57 5.59 5.60 5.55 5.39
11/03/2023 5.53 5.56 5.53 5.50 5.45 5.29
11/10/2023 5.53 5.55 5.53 5.47 5.46 5.38
11/17/2023 5.52 5.54 5.50 5.42 5.39 5.24
11/24/2023 5.55 5.56 5.54 5.48 5.45 5.27
12/01/2023 5.55 5.53 5.43 5.45 5.33 5.05

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
10/27/2023 4.99 4.84 4.76 4.83 4.84 5.19 5.03
11/03/2023 4.83 4.62 4.49 4.55 4.57 4.93 4.77
11/10/2023 5.04 4.80 4.65 4.68 4.61 4.93 4.73
11/17/2023 4.88 4.64 4.45 4.47 4.44 4.80 4.59
11/24/2023 4.92 4.67 4.49 4.51 4.47 4.79 4.60
12/01/2023 4.56 4.31 4.14 4.22 4.22 4.58 4.40

Following the slumbering Thanksgiving week, treasuries made up for lost time with radical, momentous gains at the middle and long end of the curve, led by yields on 2-year, 3-year, and 5-year notes falling by 36, 36, and 35 basis points, respectively.

Yield on the 30-year bond dropped to 4.40%, down 20 basis points. The 10-year note yield dipped 25 basis points, to 4.22%, the lowest since September 1, and now equal to the 7-year. With 5-year notes yielding 4.14%, 5s-10s are now dis-inverted, or, in bond parlance, normalized.

Spreads moved in opposite directions, with 2s-10s tightening to -34 basis points while full spectrum (30-days out to 30-years) expanded to -105, the deepest plunge into inversion since mid-September.

With widespread speculation of rate cuts as early as May, 2024, Fed Chairman Jerome Powell tried to talk tough love in a Friday speech:

"It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease," Powell said in prepared remarks for an audience at Spelman College in Atlanta. "We are prepared to tighten policy further if it becomes appropriate to do so."

The markets weren't listening.

The final FOMC policy meeting of the year comes December 12-13, along with the usual dot-plot nonsense and a press conference by Chair Powell. Expectations are for the Fed to hold steady on rates, which have not increased since July, remaining at 5.25-5.50%.

Spreads:
2s-10s
9/15/2023: -69
9/22/2023: -66
9/29/2023: -44
10/06/2023: -30
10/13/2023: -41
10/20/2023: -14
10/27/2023: -15
11/03/2023: -26
11/10/2023: -43
11/17/2023: -44
11/24/2023: -45
12/01/2023: -34

Full Spectrum (30-days - 30-years)
9/15/2023: -109
9/22/2023: -99
9/29/2023: -82
10/06/2023: -64
10/13/2023: -82
10/20/2023: -47
10/27/2023: -54
11/03/2023: -76
11/10/2023: -80
11/17/2023: -93
11/24/2023: -95
12/01/2023: -105


Oil/Gas

WTI crude ended Friday at $74.38, down from $75.18 last week and from $76.08 the week before that. Oil prices advanced to as high as $79.37 in the wee hours of Thursday morning, but as the delayed OPEC+ meeting, originally slated for November 26, took place, the price collapsed to as low as $75.19, and took another, smaller dive on Friday. The rapidity of the moves on the OPEC+ production cuts suggests some large, mainly wrong-footed hedging positions were unwound.

While the OPEC+ nations finally agreed to an online meeting Thursday, West African nations were clearly not aligned with production cuts, which, at this juncture, are voluntary. Specifically, Angola insisted on non-compliance with any reductions in output, suggested or otherwise. Aside from the obvious rifts in the cartel, US crude production is at record levels, despite the spurious claims of climate change reduction in fossil fuels by the people pulling Joe Biden's puppet strings.

Slowing economies, conservation efforts, further efforts toward electrification world energy structures, and an overall glut on the market continues to weigh on prices. The range between $70 and $80 remains a comfort level for both producers and consumers, though prices could easily fall further, as they did intermittently between March and July of this year. If winter in the Northern Hemisphere is a mild one, which is likely due to el Nino, and US and European economies continue to cool down, prices could conceivably drop into the $55-65 range by February or March.

According to gasbuddy.com, the national average for a gallon of unleaded regular gas at the pump did not move, holding steady at $3.24. Yhe lowest prices are in Oklahoma, knocked down to $2.65

Most of the Southeast is currently at or under $3.00 a gallon, led by Mississippi ($2.71), Texas (2.72), and Louisiana ($2.73). A wide swath of the states, from South Carolina across to Texas and north through Arkansas ($2.76), Missouri ($2.81), Iowa ($2.90), all the way to Wisconsin ($2.92) are below $3.00 (16 in all). Florida and Georgia bucked the trend, as gas prices rose to $3.14 in the sunshine state and weren't so peachy to the north, at $3.05.

California dropped another 10 cents, to $4.79. Prices eased across the West, with Washington ($4.33) down another three cents. Nevada fell to $4.11, down six cents. Oregon ($3.98) dropped out of the $4+ club; Arizona ($3.41) fell another 10 cents. The $4+ club now consists of just three states, California, Washington, and Nevada. Back in the summer, the ranks had swelled to as many as eight.

In the Northeast, Pennsylvania is the highest ($3.56), followed by New York ($3.51). The lowest prices in the region are in Kentucky ($2.93) and Ohio ($2.94). With the same prices as last week, Illinois ($3.37) remains on top in the Midwest, followed by Michigan ($3.22).


Bitcoin

This week: $39,595.40
Last week: $37,217.80
2 weeks ago: $36,480.90
6 months ago: $27,121.50
One year ago: $17,087.80

Bitcoin, the only crypto that might even matter long term, was boosted along with just about everything else this week.


Precious Metals

Gold:Silver Ratio: 80.76; last week: 81.83

Per COMEX continuous contracts:

Gold price 11/03: $1,999.90
Gold price 11/10: $1,942.70
Gold price 11/17: $1,983.50
Gold price 11/24: $2,023.60
Gold price 12/01: $2,091.70

Silver price 11/03: $23.33
Silver price 11/10: $22.31
Silver price 11/17: $23.77
Silver price 11/24: $24.73
Silver price 12/01: $25.90

On Friday, gold hit record levels on various measuring sticks, most notably on the COMEX futures, where rices were 3.4% higher on the week, and rose as high as $2,076.10 per ounce, topping the previous all-time high of $2,072.49 made in 2020.

A variety of commentators attribute gold's record-setting to Fed policy, citing a claim that the Fed will cut interest rates in March or May of next year, which would be positive for precious metals, but they largely miss the point that gold, a central bank tier one asset, is acting as a replacement for paper money, specifically treasury bills, notes, and bonds.

Those reserve assets are being shed in favor of gold, which has no counter-party risk associated with it, whereas treasuries are backed by faith in and credit of the US government and the Federal Reserve, both of which were badly damaged when sanctions were imposed and reserve assets seized from Russia in 2022. That action set off alarm bells in central banks around the world. It implied that the US could not be counted upon to be an impartial arbiter and honest dealer of the world's reserve currency.

This is a fundamental shift in global financial understanding which has led to many countries - specifically, BRICs nations and those aligned with them - incrementally replacing treasuries with shiny metals. While US paper assets may still be "as good as gold," they're proving to be not better than what has been real money for many millennia.

As gold is expected to continue its path higher, silver has been outperforming the past few weeks, as evidenced by the falling gold:silver ratio which this week fell to 80.76. Being incredibly undervalued and underpriced, silver is likely to ascend beyond heights last seen earlier this year during the banking crisis between March and May, where it topped out around $26.25.

Current global conditions indicate that the suppression tactics of the dollar-yen-euro cartel are fading and becoming ineffective. Among the more strident goldbugs, economist and expert trader Andrew Maguire has made statements about central banks revaluing gold at some point in 2024. Whether his predictions come to fruition, it's clear that gold and silver are poised for significant breakouts. If that is indeed the case, time grows short to buy at current, which probably will look like bargains in years ahead.

Think long-term, and think in ounces, not dollars, euros, or yen. Gold is at record levels against almost all currencies, worldwide and will retain value when these currencies eventually fail. Gold should be the basis of large-scale government and central bank finances. Silver is more for the people, and can be employed as a means of exchange as well as a store of value.

Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping included):

Item/Price Low High Average Median
1 oz silver coin: 30.27 48.00 37.85 36.25
1 oz silver bar: 31.00 45.78 38.31 37.17
1 oz gold coin: 2,148.95 2,260.17 2,193.41 2,203.36
1 oz gold bar: 2,149.69 2,277.53 2,180.00 2,164.17

Prices on eBay continue to rise. Eager buyers are converging towards a potential mania. If supply becomes an issue, which, in silver's case may be sooner than later, prices could explode higher.

The Single Ounce Silver Market Price Benchmark (SOSMPB) continued adding to recent gains, at $37.40, a gain of 13 cents above the November 26 price of $37.27 per troy ounce.


WEEKEND WRAP

Only 22 days until Christmas. The next two weeks could be the lull before the storm. With holiday spirits as high as stocks, gold, and treasuries, a combination of tax-selling and speculation may produce a sideways effect through year end. Predictions of anything from elections to interest rate decisions should be taken with multiple grains of salt, two aspirin, and a sprinkle of fairy dust.

At the Close, Friday, December 1, 2023:
Dow: 36,245.50, +294.61 (+0.82%)
NASDAQ: 14,305.03, +78.81 (+0.55%)
S&P 500: 4,594.63, +26.83 (+0.59%)
NYSE Composite: 16,263.75, +174.91 (+1.09%)

For the Week:
Dow: +855.35 (+2.42%)
NASDAQ: +54.18 (+0.38%)
S&P 500: +35.29 (+0.77%)
NYSE Composite: +279.93 (+1.75%)
Dow Transports: +269.56 (+2.45%)


Disclaimer: Information disseminated on this site should not be construed as investment advice. Downtown Magazine Inc., Money Daily and it's owners, affiliates and/or employees are not investment advisors and do not offer specific investment advice. All investments have risk. You should consult a professional investment advisor or stock broker or use your individual judgement when making investment decisions. By viewing this site, you hold harmless Downtown Magazine Inc., Money Daily, its owners, affiliates and employees against any and all liability. Copyright 2023, Downtown Magazine Inc., all rights reserved.

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idleguy.com April/May 2024IdleGuy.com April/May 2024, Vol. 1 #4